Overview

Annual reporting is a cornerstone of nonprofit compliance. The IRS requires tax-exempt organizations to file an annual information return that matches the organization’s size, type, and activities. These returns serve three purposes: they confirm continued qualification for tax-exempt status, inform the IRS about activities and finances, and produce documentation that may be made public.

The primary filings are the Form 990 series. Which form you file depends on gross receipts and total assets; the form you choose affects the level of detail you must disclose and the public record.

(Authoritative guidance: IRS, “Annual Reporting Requirements for Charities,” https://www.irs.gov/charities-non-profits/annual-reporting-requirements-for-charities; IRS, “Charitable Organizations,” https://www.irs.gov/charities-non-profits/charitable-organizations.)

In my practice advising nonprofits for over 15 years, the most common mistakes I see are using the wrong return, missing the timely-filing window, and under-reporting compensated officers or unrelated business activities. Correcting those errors late is costly; prevention is straightforward when you understand the filing rules and calendar.

Which Form to File

  • Form 990: Generally required for organizations with gross receipts equal to or greater than $200,000 or total assets of $500,000 or more. Form 990 is the most detailed and includes governance, compensation, program service accomplishments, and several schedules.

  • Form 990-EZ: Typically used by organizations with gross receipts under $200,000 and total assets under $500,000. It is shorter than the full Form 990 but still requires meaningful disclosures.

  • Form 990-N (e-Postcard): For organizations with gross receipts normally $50,000 or less. The e-Postcard confirms the organization is active and lists basic contact information.

Note: Private foundations file Form 990-PF regardless of size. Organizations with unrelated business income file Form 990-T to report unrelated business income tax (UBIT).

Internal resources: see our detailed entries for Form 990 – Return of Organization Exempt From Income Tax and the simplified Form 990-N e-Postcard.

(IRS reference: see Publication 557 and the IRS Charities pages cited above.)

Filing Deadlines and Extensions

Due date: Exempt organization returns are due on the 15th day of the 5th month after the organization’s accounting period ends. For calendar-year organizations, the typical deadline is May 15.

Extensions: Organizations that need more time can request an automatic extension using Form 8868 (Application for Extension of Time to File an Exempt Organization Return). The extension generally grants six additional months to file the return but does not extend payment deadlines for any taxes owed.

Internal link for the extension form: Form 8868 — Application for Extension of Time to File an Exempt Organization Return.

(IRS page: Form 8868 instructions—see IRS website.)

Key Schedules and Special Filings to Watch For

Form 990 includes several schedules. Commonly relevant schedules include:

  • Schedule A: Public charity status and public support.
  • Schedule B: Schedule of contributors (filed with the IRS; public disclosure rules vary by filer and state).
  • Schedule O: Supplemental information—used to explain responses on the return.
  • Schedule R: Related organizations and transactions.
  • Schedule H: Hospitals (if applicable).

If your organization receives unrelated business income, files for political activities, or maintains foreign operations or grants, you may need additional schedules or separate returns (for example, Form 990-T for UBIT).

State Filings and Public Disclosure

Federal filing does not replace state registration. Many states require registration for charitable solicitation, annual financial reports to the state attorney general, or separate state tax filings. State rules vary widely; check the charity regulator in each state where you solicit funds.

Form 990 is generally a public document. The IRS makes returns available to the public and many state charity databases post copies or summaries. Understand what will be disclosed about compensation, grants, program accomplishments, and contributors—this affects donor privacy and public perception.

(See IRS guidance on public disclosure of exempt organization returns.)

Penalties and Risk of Revocation

  • Automatic revocation: If an organization fails to file a required Form 990, 990-EZ, or 990-N for three consecutive years, the IRS will automatically revoke its tax-exempt status under Internal Revenue Code section 6033(j). Reinstating exemption after revocation can be complex and costly.

  • Monetary penalties: The IRS may assess penalties for late filing, inaccurate returns, or failure to furnish required schedules. Penalties vary by the size of the organization and the type of failure; consult current IRS penalty guidance for exact figures.

  • Other risks: Noncompliance can lead to audits, donor distrust, lost state registration, or liability for unpaid payroll or unrelated business taxes.

(IRS reference: “Charitable Organizations” and Publication 557.)

Common Pitfalls and How to Avoid Them

  1. Filing the wrong form. Track your gross receipts and assets throughout the year. If you cross a threshold, move to the next appropriate form for the next filing period.

  2. Missing the 3-year rule. Even small organizations that believe they are inactive must file the e-Postcard (990-N) or risk automatic revocation.

  3. Underreporting unrelated business income. If you run a business activity unrelated to your exempt purpose, file Form 990-T and pay UBIT. Excluding this income can raise audit risk.

  4. Poor documentation for compensation. The IRS closely examines compensation paid to officers, key employees, and contractors. Maintain board minutes, compensation studies, job descriptions, and conflict-of-interest disclosures.

  5. Omitted schedules. Schedules add context and explain key answers. Missing schedules or incomplete Schedule O narratives often trigger IRS follow-ups.

  6. State compliance oversight. Charity registrations, sales tax exemptions, and state payroll filings are separate obligations—assign someone to track state deadlines.

Practical Checklist (Before You File)

  • Reconcile bank accounts and credits; produce annual financial statements.
  • Confirm gross receipts and assets to choose the correct Form 990 series.
  • Prepare supporting schedules (Schedule B, O, R, etc.) and trustee/board information.
  • Document compensation decisions and conflict-of-interest policies.
  • File Form 8868 before the original due date if you need an extension.
  • Verify state charity registration requirements and renew or file as needed.

When to Get Professional Help

Engage a CPA or nonprofit tax attorney when:

  • You cross filing thresholds for the first time.
  • You have unrelated business activities subject to UBIT.
  • You are applying for tax-exempt recognition or seeking reinstatement after revocation.
  • You face an IRS inquiry or audit.

In my work, bringing a CPA on board before you hit a reporting threshold saves time and reduces audit risk. An experienced nonprofit CPA will help structure board minutes, compensation decisions, and disclosures so the return reflects both accuracy and best governance practices.

Resources and Further Reading

Professional Disclaimer

This article provides educational information on federal filing options and common pitfalls for tax-exempt organizations. It is not a substitute for personalized tax, legal, or accounting advice. For decisions affecting your organization, consult a qualified nonprofit CPA or attorney who can analyze your facts and circumstances.